(Bloomberg) — Chinese stocks listed in the US tumbled Wednesday as concerns over the nation’s economic outlook and a rise of Covid cases in the middle of the twice-a-decade party congress weighed on investor sentiment.
(Bloomberg) — Chinese stocks listed in the US tumbled Wednesday as concerns over the nation’s economic outlook and a rise of Covid cases in the middle of the twice-a-decade party congress weighed on investor sentiment.
The Nasdaq Golden Dragon China Index sank 7.1%, its steepest one-day decline since May 9, putting the gauge at its lowest closing level in more than nine years. The index has erased all its gains since mid-March, when Beijing announced a strong push to stabilize its markets.
Nio Inc., Li Auto Inc., Xpeng Inc. and Bilibili Inc. were among the worst performers, each sliding more than 10%. Some of China’s largest tech companies listed in New York including Alibaba Group Holding Ltd., JD.com Inc. and Baidu Inc. also sank.
Wednesday’s selloff came after shares listed in China and Hong Kong dropped amid a rout in consumer stocks and concerns about the region’s earnings outlook. Adding to the wall of worry for investors was the surge in Beijing’s Covid cases to the highest in four months and the government’s unprecedented silence on key economic indicators. The Hang Seng Tech Index slumped 4.2% overnight, to close near a record low level, as Hong Kong Chief Executive John Lee’s policy speech disappointed some investors.
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The market’s sentiment remains fragile as President Xi Jinping holds the Communist Party Congress meeting, which is due end this week. China’s onshore yuan also slumped to record low Tuesday.
“Investors are disappointed that there wasn’t any signal of future relaxation of zero-Covid policies, and stronger support pledged for the real estate sector,” said Louis Lau, a portfolio manager at Brandes Investment.
Chinese stocks listed in the US have been mired in tumult for a slew of reasons including escalating tensions between policymakers in Beijing and Washington that has led to delisting fears, a government clampdown on various industries including tech, the nation’s stringent Covid curbs and a slump in the property sector. The Nasdaq Golden Dragon China Index has dropped 75% from its peak in February 2021.
The wild swings in the group also have lured bearish bets. Over the last 30 days, the market saw a 3.6% increase, or $635 million, in short selling for US-listed Chinese stocks, said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.
–With assistance from Henry Ren.
(Updates share prices throughout and adds fund manager comments in sixth paragraph, short interest data in the last paragraph.)
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